MEXICO CITY (Reuters) - Mexico will control domestic corn prices further to make sure rising global costs do not push inflation up and hurt consumers, President Felipe Calderon said on Thursday.
Speaking at the Reuters Latin American Investment Summit, Calderon said he would likely strike a new deal with corn flour producers to cap prices. An earlier agreement runs out on April 30.
"Whatever happens, there will be policies and decisions by the government aimed at controlling and mitigating the dramatic change of international prices," Calderon said.
Soaring U.S demand for ethanol has sent corn prices to their highest in a decade, pushing up prices of Mexico's national food staple, the tortilla, and fueling inflation.
"We are following the price of tortillas very closely," Calderon said. "Despite this turbulence, we will keep inflation under control."
In January, the government reached a deal with corn flour producers, such as market heavyweight Gruma, to limit the price of their product to 5 pesos (46 cents) per kilo.
Helped by the price cap and crackdowns on speculators, inflation slowed more than expected in the first half of March, reducing the chances the central bank will raise interest rates on Friday.
Inflation for the period was 0.08 percent in the first half of March as recent high prices for staple food products eased.
Closely watched core inflation, which strips out some volatile prices for energy and some food products, was 0.16 percent during the first half of the month. .
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